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Spain experiencing brain drain as weak economy lingers

The exodus is a persistent symptom of an economic crisis that hit in 2008 when loose lending practices by banks spurred a building boom that went too far, bankrupting developers and leaving banks with bad loans on hundreds of thousands of unsold housing units.

Spain experiencing brain drain as weak economy lingers

Spain is grappling with a brain drain in which hundreds of thousands of Spaniards have fled to find work outside of a country where one in four people are jobless and companies are not hiring.

A worker fits the interior panelling to an automobile door section on the production line at the Ford Espana SL plant, in Almusafes, Spain. Spanish manufacturing expanded recently for the first time in more than two years.(Photo: Angel Navarrete Bloomberg)

Story Highlights

Exodus is symptom of economic crisis that hit in 2008

Unemployment in Spain hovers stubbornly around 26%

Engineers, IT specialists, medical professionals are in high demand elsewhere

MADRID — Five years ago, Princeton researcher Amaya Moro-Martin boarded a plane to Spain. The astronomer was all smiles; after a decade of living in the USA, she was going home to her dream research job in Spain.

But the tenure-track university position that lured her home never materialized. The job was eliminated as part of public spending cuts by a Spanish government struggling to pull the country out of an economic recession. In a country where one in four are unemployed, Moro-Martin, 38, was left jobless.

"It was clear to me that if I wanted to continue doing research activities, I had to leave," Moro-Martin says, her voice shaking with frustration.

At the end of this year, she'll pack up her family once again and get on a plane to the USA. This time, she says, she's not coming back.

Moro-Martin is one of hundreds of thousands of people who will leave Spain this year. Last year, about half a million people left, many of them highly skilled professionals or entrepreneurial elite headed to the USA, Germany and Britain.

The exodus is a persistent symptom of an economic crisis that hit in 2008 when loose lending practices by banks spurred a building boom that went too far, bankrupting developers and leaving banks with bad loans on hundreds of thousands of unsold housing units.

Hundreds of thousands of Spaniards lost their jobs as the government cut public payrolls to qualify for European financial aid and private firms shed jobs. Companies froze hiring, and the unemployment rate in Spain, the fourth-largest economy on the Eurozone, hovers stubbornly around 26%.

Employment Minister Fátima Báñez says Spain is experiencing an "unprecedented flight of talent." Two thousand doctors have left Spain this year, she says. One in 10 engineers have left. Of the architects who remain, 73% say they are eyeing opportunities abroad, she says.

Spain's economy expanded slightly in the third quarter this year, marking the economy's first expansion in nine quarters, but not enough to affect employment or avoid calls from European lenders for more austerity measures (spending cuts and increased tax revenue).

"There is no precedent for this situation," Moro-Martin says. "Never in Spain has there been such drastic budget cuts, such widespread chaos in the system, never before have we seen this."

She and fellow scientists have come together to form a group called Dignified Research. They're calling on the Spanish government to boost funding for research or risk a total collapse of the country's research system.

Researchers are being forced to decide, she says, between emigrating to continue their research or staying in Spain and conducting research in precarious conditions, such as month-to-month contracts and budgets too small to afford basic lab supplies such as gloves and lab coats.

From its small office in downtown Madrid, the team at the staffing agency Adecco has watched this trend transform its day-to-day operations.

"Three or four years ago, we were bringing people to work in Spain," Alberto Muñoz Vigueras says.

These days, he's busy sending Spaniards to work abroad.

Engineers, IT specialists and medical professionals are in high demand, he says. Most of the people they place have jobs in Spain, but they're happy to leave.

A recent study by Adecco found that one out of two Spanish citizens would go abroad in exchange for a job with a similar or even slightly lower income than what they were earning in Spain.

"In the short term, it's a loss for Spanish society," Muñoz Vigueras says. "But in the long run, it benefits Spain."

The majority of those leaving will eventually come back, he says, and when they do, they'll bring with them language skills and international experience.

Economist Gayle Allard is not so sure.

"The numbers are shocking," says Allard, who works for the Instituto de Empresa, a business school in Madrid.

She says the main cause of the export of talent is the country's rigid labor laws that protect workers for life by making it enormously expensive for firms to fire or lay off workers. The laws make it hard for companies to compete or justify hiring new workers and made Spain unattractive to foreign companies to locate here.

"It's like their economy is in a corset," she said.

Last year, the government pushed through a set of labor market changes, making it less expensive for companies to fire workers and allowing firms to rework union contracts that impeded technology improvements.

Spain's government says the changes led to the first rise in exports in years. But a more productive workforce does not mean more jobs right away.

The initial impact of the changes has been to destroy jobs, Allard says.

"Soon it should start generating jobs because companies should be less afraid to hire people now that the severance cost is not so high," she says. "But of course, nothing is going to generate jobs until the economy grows."

The Spanish government says it will make it easier for small and medium companies to hire by reducing the variety of different work contracts an employee can try to work under, according to Spanish law. Workers and employers can choose from 41 contracts; the government wants to reduce the number to five.

Encouraging companies to take on new employees should rank high on the government's list of priorities, Allard says, given all the money the state has spent on training and educating Spaniards who are leaving the country.

"If these people don't come back, then it's a net loss, because you trained them and another country took them," Allard says.

Others don't see a brain drain as an issue.

"If we compare the number of Brits or Germans who leave their country each year, in Spain the numbers are quite low still," says Carmen González Enríquez, a researcher with the Real Instituto Elcano, one of Spain's most influential think-tanks.

"The numbers are alarming only because we've passed many decades as a very immobile society," she says. "If you look at the 1970s, there was practically no immigration outside of Spain."

"Companies don't have any problems finding qualified people. Hospitals aren't having any troubles finding the doctors they need," she says. "We're not suffering because Spaniards are moving to other countries."

It may take until the year 2020 to fully grasp the impact of this migration. That's the year, according to a report by employment agency Randstad, that Spain will find itself short 1.9 million highly skilled workers.

Randstad found that the labor shortage will be particularly acute in the fields of health, IT and engineering.

"Given the kind of climate we're in right now, those findings surprised us," says Randstad's Luis Perez. "When unemployment is so high, speaking about a shortage of workers seems incredulous."